US farm markets, were mixed but mostly lower yesterday.
Corn prices faced fractional losses.
Soybeans suffered the most downside, until to have double digits losses.
Chicago SRW and MGEX spring wheat contracts, meantime, managed to scrape up small gains, while Kansas City HRW contracts took a moderate hit.
On macro markets, oil prices climbed on this morning, hitting their highest levels in at least three years and extending gains triggered during yesterday’s session after the world’s major oil producers announced they had decided to keep a cap on crude supplies.
Thus, Brent crude was up by 40 cents or 0.5% at $81.66 a barrel by 03:41 GMT, after rose 2.5% on Monday.
U.S. West Texas Intermediate (WTI) oil rose 30 cents or 0.4% to $77.92, after gaining 2.3% the previous session.
Oil prices have already surged more than 50% this year, a rise that has added to inflationary pressures that crude-consuming nations are concerned will derail recovery from the pandemic.
On the financial side, the Dow Jones Industrial Average fell 0.94% to 34,002.92, the S&P 500 lost 1.30% to 4,300.46 and the Nasdaq Composite dropped 2.14% to 14,255.49 as investors dumped Big Tech stocks in the face of rising Treasury yields.
U.S. Treasury yields rose on investor caution about the need to raise the government’s debt ceiling as the United States faces the risk of a historic default in two weeks.
During the late trading on Wall Street, the U.S. Senate prepared to vote on a bill passed in the House of Representatives that would extend the U.S. debt limit to December 2022, eliminating one deadlock in Congress that has unsettled investors.
Meantime, the U.S. dollar traded near a one-year high versus major peers ahead of key U.S. payrolls data due at the end of the week which might offer clues on the timing of a tapering of Federal Reserve stimulus and the start of interest rate increases.
The dollar index =USD , which tracks the greenback versus a basket of six currencies, indeed, edged up 0.09% to 93.928.
Market focus in Asia will be on whether embattled property developer China Evergrande offers any respite to investors looking for signs of asset disposals.
Shares in the company were halted for trading on Monday.
Meantime, Asian shares suffered heavy losses early on this morning following a broad sell-off on Wall Street.
Thus, MSCI’s broadest index of Asia-Pacific shares outside Japan dropped as much as 1.3%, falling for a third consecutive session.
Japan stocks were down 2.8%, South Korea gave up 2.5% and Australia shed 1%.
Markets fretted about the impact of multi-year high oil prices at a time when supply chain disruptions are already putting pressure on economic activity.
Coming back on grains market, until Thursday, its expect some measurable moisture if you’re east of the Mississippi River, but most of the Great Plains will stay completely dry during this time, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook anticipates a return to seasonally wet weather for most of the Midwest and Plains between October 11 and October 17, with warmer-than-normal conditions likely for the eastern two-thirds of the country next week.
That are bringing some concerns about harvest delays in coming weeks.
Meantime, corn harvest was reported 29pc complete, figures released after the market close, bean harvest 34pc and milo 38pc.
The arrival of these new availabilities thus leads to a slight pressure on prices.
On the other hand, planting of winter wheat was 47pc done with 19pc already emerged.
Despite most expectations being for faster field work across all crops the report numbers are still largely within range.
On the other hand, weekly export inspections had a corn improve to 808,000t for the week ending September 30.
That was above the entire range of analyst estimates.
Soybean export inspections also made it to the upper end of trade estimates, reaching 844,000t last week.
China was by far the No. 1 destination.
Wheat export inspections jumped significantly higher week-over-week, reaching 611,000t.
That exceeded the entire range of trade estimates.
The Philippines led all destinations.
Milo/sorghum reached 77,000t, to Mexico and Sudan but not to China.
Meantime, yesterday private exporters reported to USDA the sale of 427,000t of corn for delivery to Mexico during the 2021/22 marketing year, which began September 1.
On the other hand, some concerns are coming about Chinese exports front.
Particularly, China has failed to make good on some of its trade deal promises it made to the U.S. last February, and trade tensions between the two countries are on the rise.
On this wake, the new US administration’s announcement of their “strategy” for China, largely as expected, that condemned China’s “unfair” trade practices and suggested that they are looking at enforcement options for the failures to follow previous trade deal commitments.
In what was interesting timing, the USDA also released their “Trade Issues” report for specialty crops, including wine, in which repeatedly highlighted China’s trade restrictions.
In this context, corn basis bids were steady to mixed, showing a bit of volatility in both directions after rising as much as 15 cents at an Illinois ethanol plant while sinking as much as 30 cents at an Iowa processor.
Soybean basis bids were mostly steady to weak after tilting 3 to 5 cents lower at five Midwestern locations.
An Illinois processor bucked the overall trend after firming 5 cents.
From Canada, Canadian canola exports are still marginal and thus reduce the availability for European importers.
From South America, Brazilian consultancies AgRural and Safras & Mercado both estimate that 4% of the 2021/22 soybean crop has been planted, versus 2% at the same time last year.
Brazil’s government is predicting planted acres will rise 3.6% from a year ago to 98.6 million acres, with a record-breaking production of 5.190 billion bushels.
Meantime, Brazil’s corn exports declined rapidly last month due to lack of supplies in the country.
On European market, Euronext maintained its strong bullish pace Monday night in a market still characterized by sustained demand and limited supply.
European corn also remains in the green in the face of harvest delays in France and Ukraine.
Rapeseed also set a new record at the end of the session, still driven by extremely tense fundamentals and by the surge in crude prices.
European Union canola plantings for 2022 are expected to rise 7% to 13.838 million acres, due in large part to high prices, according to Strategie Grains.
The versatile oilseed is used to produce edible oil, animal feed and biofuel.
EU canola stocks are also at a record low, at just under 4 million bushels, with a record low stocks-to-use ratio of 3.9%.
In this context, already supported by the easing of the euro against the dollar, the European commodities are finding new support in the face of rising energy prices.
From the Black Sea basin, weather maps for Russia are still flirting with chances of rain mid-month, but fairly dynamic model runs and not as much on the maps as desired.
Meantime, there are talk about reduced Russian winter wheat acres is doing the rounds (some analysts have seen Russia winter wheat area down 0.5-1.2 mln ha y/y), blaming the combination of dry weather and reduced prices from the floating export tax.
In this context, grain prices are still rising, supported by export demand.
Russia, indeed, is thought to have exported around 158 million bushels of wheat in September, according to the Sovecon consultancy.
If realized, that’s the biggest monthly tally since February.
Russian wheat exports 21/22 its expect at 31,5mmt.
This situation also risks pushing Russia to review its export management for the current campaign.
The steady rise in taxes has not so far had a decisive effect on the price level of the domestic market that the authorities wish to contain.
Thus, reinstating the import quota in the second part of the season is a possible hypothesis in order to better control flows.
This combined mechanism between quotas and taxes was already put in place last year in order to contain exports between February 15, 2021 and the end of June.
However, operators are cautious about the reinstatement of such a system for the current campaign.
From the Middle East, Iran is expected to more than triple its wheat imports in the 2021/22 marketing year and could import up to 8 million mt after hot and dry weather conditions in the region, while at least half of the needed volume has already been covered.
Analysis by Agricensus of shipping line-up data from the region also suggests the country has already secured significant volumes of Russian wheat this marketing year, despite official data showing no such exports.
Local estimates for the current crop stand at around 4.5 million mt, while consumption is expected to reach 12 million mt.
Currently, the USDA is expecting wheat production to reach 15 million mt, down 10% year-on-year, but data for the US agency is difficult to gather amid an escalation in political tensions between the two countries in recent years.
However, with domestic demand put at 12 million mt, the gap needing to be covered by stocks and imports could stand at 7.5 million mt.
From Australia, rains on the map for NSW are starting to push over an inch for central and northern areas raising new quality concerns up north if this pattern continues.
Less rain is forecast down south where some crops could still benefit.
Internationally, Taiwan’s FMA issued an international tender to purchase 48000t of grade 1 milling wheat from the United States, which closes on Thursday.
The grain is for shipment between late November and early December.
Jordan’s state grains buyer has issued a new international tender to purchase 120,000 tonnes of animal feed barley
Possible shipment combinations are Dec. 16-31, 2021, and in 2022 between Jan. 1-15, Jan. 16-31 and Feb. 1-14.
Deadline offers is Oct 7, 2021.
Jordan has issued an international tender to buy 120,000 tonnes of milling wheat which can be sourced from optional origins.
Possible shipment combinations are in 2022 between Jan. 16-31, Feb. 1-14, Feb. 15-28 and March 1-15.
Deadline offers Oct.6, 2021.
Note: next Tuesday the October WASDE come out and will incorporate last week’s stocks and production figures.
We wish you a good day.
